BP Now a Target? | Russell T. Rudy Energy LLC
“World Oil” reports that with BP’s settlement of government claims related to the Macondo blow-out the company has now become a potential takeover target. The company has agreed to pay federal and state governmental entities $18.7 billion in return for dropping all further claims related to the disaster. BP still faces litigation from businesses and residents from Texas to Florida. Nevertheless, the settlement removes major uncertainty as to the company’s future, and ironically makes it more attractive as a potential takeover.
Since the Macondo incident in the Gulf of Mexico five years, ago BP has lost a third of its market value and assets and 1 million barrels per day of oil production. Industry observers predict that it will take years to restore the company to its pre-spill performance.
The company seems well aware that it is a potential takeover target. In conjunction with advisors such as investment banker Morgan Stanley, BP has war-gamed various takeover scenarios. A potential buyer would also have to get the approval of the British government which has already indicated that it would oppose any acquisition by a foreign entity.
Nevertheless, BP could be an attractive addition to another international major’s portfolio. It has the lowest enterprise value relative to its daily oil and gas production of the six largest privately owned oil companies. Based on its recent stock price, its value when compared to production is less than half that of ExxonMobil.
Not only would BP be a bargain, it has promising deepwater prospects in the Gulf of Mexico and Angola, as well as an industry-leading energy trading unit. However, even in its diminished state, the company is so big that probably only ExxonMobil could absorb it.
To read the article in its entirety, please go to http://www.worldoil.com/news/2015/7/03/bp-s-spill-deal-is-catalyst-for-acquirers-as-uncertainty-ends .
